RTTNews - European stocks are likely to extend the previous session's gains on rising commodity prices amid optimism about signs of recovery in the U.S., the world's largest economy.
On Wall Street, shrugging off a report that showed U.S. trade deficit widened in June, the major U.S. averages rose over 1% each after the U.S. Federal Reserve said it saw signs of the recession-mired U.S. economy stabilizing. The Federal Open Market Committee announced that it was maintaining the target range for its benchmark federal funds rate at zero to 0.25% and repeated its belief that low rates will persist for what it calls an extended period. The central bank added that economic activity is leveling out.
Taking cues from Wall Street, Asian stocks also showed impressive gains on Thursday with investors picking up stocks from technology, automobile and financial sectors with renewed vigor. Recent encouraging economic reports and fairly buoyant April - June quarterly earnings also offered some support.
Crude oil prices closed higher for the first time in four sessions on Wednesday, lifted by a Wall Street rally as the market shrugged off a larger-than-expected jump in U.S. crude inventories that fueled worries about weak demand. Light sweet crude for September delivery, which settled at $70.16 a barrel, up 71 cents on Wednesday, rose further towards $71 a barrel in Asian trading on Thursday on optimism that that the U.S. economy was through the worst of the recession.
Meanwhile, on the economic front, the Federal Statistical Office said the German economy unexpectedly expanded in the second quarter, which was the first growth since the first quarter of 2008. The largest Eurozone economy grew 0.3% sequentially in the second quarter, following a revised 3.5% contraction in the first quarter. Economists had expected a decline of 0.2%.
Separately, Statistics Finland said the wages and salaries sum of the whole economy fell 0.3% year-over-year in the April to June period, compared with a 8.1% increase a year ago.
In corporate news, French consumer electronics company Thomson SA's debt restructuring triggered a credit event, a credit derivatives committee ruled on Wednesday.
German generic-drugs maker Stada Arzneimittel reported a 26 percent drop in second-quarter net profit and said its CFO would leave immediately, without assigning a reason.
Germany-based K+S AG, which produces crop nutrient potash, swung to a loss of 30.2 million euros in the second quarter compared to a profit of 226.2 million euros in the year-ago period.
Tour operator TUI AG's second-quarter net loss widened almost tenfold to 537 million euros from 56.4 million euros in the year-ago period.
Moody's Investors Services cut corporate family and senior unsecured debt rating of France's auto-parts supplier Valeo SA to Ba2 from Ba1
Dutch insurer Aegon NV reported a second-quarter loss of 161 million euros and informed that it would issue new shares up to 10 percent of the existing share capital to partially repay a 3-billion euro state capital that it received last October.
Paris airport operator Aeroports De Paris reported a satisfactory first-half 2009 performance with revenues up almost 6% and said that it sees mild revenue growth for the full year.
Thomas Cook Group plc in its interim management statement said its board remains confident that the business will meet its expectations for the current financial year. The company also said it identified a group operating profit target of £480 million in the 2010 financial year.
The European markets rose for the first time in three days on Wednesday, as strong earnings from companies such as E.ON, Balfour Beatty and Nobel Biocare cheered investors. The FTSEurofirst 300 index of pan-European blue chips closed 1.06% higher, while the narrower DJ Stoxx 50 index rose 0.82%. Around Europe, the U.K.'s FTSE 100 index rose 0.97%, France's CAC 40 index gained 1.48% and Germany's DAX index added 1.22%.
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